German parliament backs Cyprus bailout

The Bundestag lower house voted in favour of a bailout for Cyprus, which will involve restructuring banking sector.

18 Apr 2013 14:13 GMT

Lawmakers voted 487 to 102 in support for a bailout for the embattled country with 13 abstentions [AFP]

Germany's lower house of parliament has voted overwhelmingly in favour of a bailout for Cyprus.

Of the 602 lawmakers in the Bundestag who voted on Thursday on the $13bn (10bn euro) rescue, 487 backed it, while 102 opposed it and 13 abstained.

Earlier, German Finance Minister Wolfgang Schaeuble urged the country's parliament to back the Cyprus bailout, citing the gradual recovery of other stricken eurozone members.

Schaeuble said that countries such as Portugal and Ireland had shown that tough reforms coupled with international aid could save a debt-mired country.

"Both have undertaken enormous efforts, are fulfilling the requirements of their (rescue) programmes and are on the right track," he said.

Schaeuble also noted substantial progress made in the last three years in taming the eurozone crisis, with economic progress such as a hike in exports from southern European countries as well as a sharp drop in public deficits.

Debt rescue plan

Eurozone finance ministers formally approved on Friday new terms for a Cyprus debt rescue that will cost far more than first thought, $30bn.

Germany has kicked in about one-third of the international assistance.

The debt rescue involves a radical restructuring of Cyprus's bloated banking sector, with an economy heavily dependent on financial services now expected to shrink by up to 12.5 percent over the next two years.

"In our country in particular where the euro crisis is not felt in everyday life we must issue a reminder that the people in Greece, Portugal and Cyprus are going through tough times," Schaeuble said.

He said there was "no other way" than fiscal discipline to achieve sustainable long-term stability and growth.